A Weak-Form Market Assumes Security Prices Reflect

question 19

Multiple Choice

A weak-form market assumes security prices reflect

• A) all information, both public and private.
• B) no information, prices are random.
• C) information about previous prices.
• D) information about future dividends.

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Definitions:

Systematic Risk

The danger that affects all investments within an entire market or a specific sector, commonly referred to as market risk or non-diversifiable risk.

Treasury Bills

Short-term government securities issued at a discount from the par value and pay no interest.

Market Portfolio

A theoretical portfolio that contains every asset in the market, weighted by market capitalization.

Security Market Line

A graphical representation of the expected return of investments as a function of their risk, specifically their beta.